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Western Price Survey / Archives

August 18, 2000
Cal-ISO Feels the Squeeze of High Loads and Unit Outages

The story behind this week's four consecutive days of Stage Two
emergencies is still difficult to discern. Some obvious points include
100-degree temperatures in California's desert communities leading to
higher than anticipated loads at a time when Cal-ISO said up to 2,200
MW of generation was unavailable because of mechanical failures.
Exactly which units were involved remains a mystery, although
speculation centered on the Huntington Beach, Redondo Beach and
Alamitos power stations in Southern California Edison territory.

If true, the location of the outages caused even more stress on the
system, loading transmission lines SP15 and P26 to the maximum.
because of hydro conditions in Northern California, there have been
import constraints on the AC and DC Interties.

The current heat wave in California and the Southwest is not an
extreme one-no record temperatures were recorded, for example. The
problem lies in the extended heat, with the current high pressure
system landing on California last Friday and lingering for six days
running.

Cal-ISO found itself readjusting forecasts and adjusting actual loads
higher once the numbers were all in. The high point of the week
appeared to be on Wednesday afternoon, with loads reaching 44,457 MW,
according to Cal-ISO.

The system operator's job is being made more difficult by needing to
secure increasing amounts of power each day as prescheduled loads
clearing the California Power Exchange seem to diminish in response to
the utilities' determination to pay no more than 250 mills/KWh-which
corresponds with the Cal-ISO's price cap of $250/MW for imbalance
energy.

For example, on Wednesday afternoon's Hour 15 (3 pm) when the peak was
hit, the Cal-PX had previously cleared only 28,926 MW on the day-ahead
market, 897 MW of incremental supply on the hour-ahead and 321 MW of
decremental demand, totaling just 30,144 MW. With system load hitting
44,457 MW, that meant operators had to dig up about 14,300 MW. Rumors
circulated that an "out of market" (OOM) call resulted in
paying prices far in excess of the cap, but Cal-ISO would not confirm.

When the utilities relented to accept a higher CalPX price on Tuesday
afternoon at 5 pm, the 498 mills/KWh clearing price on the hour-ahead
market elicited 1,451 MW of additional supply and 1,758 MW of
decremental demand. While analysts are still mulling the import of
such numbers, the implication is clear that lower prices lead to
reduced bids and more stress for system operators.

Outside of California, some utilities approached or surpassed record
loads. Public Service Company of New Mexico hit a new peak of 1,318 MW
on Tuesday, adjusted for increased wholesale loads.

Prices throughout the region wavered but remained at a high plateau.
The CalPX day-ahead price moved between 185 mills and 207 mills/KWh
for daytime power and 65 mills to 90 mills/KWh for off-peak.

Mid-Columbia and California/Oregon Border prices stuck fairly close
together in a range of 157 mills to 200 mills/KWh, with off-peak
mostly between 70 mills and 81 mills/KWh. Mid-C and COB ended out at
157 mills to 165 mills for Thursday peak. Palo Verde and Four Corners
were above 210 mills most of the week until they also fell to the 167
mills to 175 mills range. Trading was reported very light throughout
the West, though.

Midweek saw a blip in output from the Columbia Generating Station,
down to 90 percent of capacity. On Thursday, though, operators
determined that the safest course of action would be to take the unit
down to 60 percent to prevent possible scram is a pump seal blew out.
One of two seals broke on Saturday and while that did not force an
outage, operators took the cautious approach in order to maintain
operations until a less stressful period when they can shut the unit
and repair the seal [Arthur O'Donnell].

Low Storage Drives Prices Higher Everywhere but San Juan

With storage injection figures coming in lower than anticipated,
natural gas prices throughout the US and Canada jumped by double-
digits-everywhere except in the San Juan Basin. It appears that
increasing curtailments on the El Paso pipeline system into Southern
California are shutting gas in the basin and leaving producers with
excess supplies.

Gas traders frequently play on spreads and this week, the differences
in pricing between hubs became the major point of interest. San Juan,
for instance, fell as much as $1/MMBtu behind prices at Permian Basin
and more than $1.50 below the SoCal Border. Even at Topock, there was
a widening gap between prices into the SoCal Gas system and into
Pacific Gas & Electric's. SoCal Topock ended the week at about $4.91,
while deliveries to the PG&E connection were $4.41/MMBtu.

As gas in Northern California and Canada pushed higher following the
American gas Association's weekly storage survey, the Malin price
climbed from $3.90 to over $4.30/MMBtu before settling a few cents
lower. The spread between Malin and the PG&E CityGate halved during
the course of the week.

The Alberta price took off like a rocket, moving from $(C)
4.15/Gigajoule at the start of the week to as much as $4.78/Gj
Thursday. The index price settled at $4.67/Gj
[A. O'D.].

Western Electricity Prices
Week of August 14-18, 2000

Hub

Peak (heavy)

Off-peak (light)

Alberta Pool (C$)

191-502

59-68

California PX (WAC)

185-207

65-90

Mid-Columbia

157-200

70-81

COB

157-202

70-85

Palo Verde

167-244

61-62

Archives of the Western Price Survey for the past year are also available online.

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